I was watching Bloomberg the other day. An economist was on talking about what he thought the future would bring over the next few months. He made a statement that was very profound and I thought I’d share some of what I remember from his interview, mixed in with my thoughts. I don’t remember who he was due to the enormous amount of information I read/watch every day about the economy. What he said though, stuck with me, out of all the information I’d taken in over the prior few days. That’s why I wrote this article. Credit is due to this person though, whoever you are! I’ll place some of his direct quotes…in…um…quotes.
“Everyone is looking for an event, like Lehman” or a scandal that will simply kill the economy. I don’t believe we will see that happen. “What we are seeing is more a cancer than a single event”. “The events already happened. Obama got elected and we had Lehman”. Those were the sparks that led us into the fourth turning.
The cancer will spread slowly through several channels. The MBS mortgage scandal is massive, and it will go on for 5-years or more. We’ll have Currency devaluations, tariffs (trade wars), Austerity, and old political alliances falling, slowly and painfully. There’s no more ‘pull the band-aid off quickly’ like Lehman. The next 10 years are going to see time slow down and the economic world change for 98% of us.
So, let’s stop looking for an event like the ’29 crash or the 1932 election. We had those. Let’s look towards the next phases of our economic cycle. Phases like the ones mentioned above; currency wars, government budget cut, and tariff wars. Furthermore, I’ll be looking for more deflation. I’m firmly in the deflation camp however, that’s a discussion for another article.
Hope this helps, Jim Goulding